State Sen. Tony Williams' bad mortgage adventure

WITH THE MAYORAL primary behind him, former candidate Anthony Hardy Williams has eased back into his day job as a state senator.

Last week, he clasped hands with the other losing Democrats and winner Jim Kenney in a show of unity. Williams had moved on.

He was also ready, finally, to talk about a revelation about his past. His campaign staffers had dodged questions about it - a disastrous New Jersey real estate deal at the height of the subprime lending crisis that ended with Williams' credit in shambles, an investment property at sheriff's sale and a tenant accusing him of impropriety, according to court documents.

In a recent interview, Williams confessed that he'd been the victim of a sophisticated mortgage scammer. He laid out a series of events that he said showed how even powerful people can be taken advantage of.

In 2005, Williams said, he purchased a house in Atco, Camden County, after a friend in real estate told him he could help a woman on the verge of foreclosure named Darlene Johnson.

"A friend of mine approached me about using my credit to help people who were losing their homes," Williams said. "If you're born into a life of service, this is the kind of stuff that you do."

The friend, who Williams could only identify as a man named "Achmed" from West Philly, told him that he could help by getting into a "leaseback" or "lease buyback," a transaction that would become emblematic of the mortgage bubble of the 2000s.

The idea was for Williams to get a mortgage to buy the soon-to-be foreclosed property, while Johnson remained in her home and paid rent to Williams to cover his costs. When Johnson's finances improved to the point where she could qualify for her own mortgage, she would buy the property back from Williams.

The senator, who said he never saw or visited the property, was told he would get a "fee" for his trouble.

At least, that's how it was supposed to work.

After months of requests by Philly.com to speak with Williams about the transaction, the lawmaker agreed to discuss it at the law offices of Center City criminal defense attorney George Bochetto.

Williams said he saw the real estate deal as a chance at altruism. What it became, he said, was "a nightmare that won't go away."

Irv Ackelsberg, a Philadelphia-based mortgage expert and author of a recently published treatise on Pennsylvania mortgage foreclosure law, said that "buyback" deals were notoriously unstable.

"Homeowners known to be in trouble were viewed as potential targets for all sorts of mortgage scams," Ackelsberg said. "In some cases, the same mortgage brokers who put people into bad loans also were involved in foreclosure 'rescue' scams . . . It works sort of like a promised refinancing, but in this case you're giving away the title to your house."

In Williams' case, the $225,000 transaction for the Baker Avenue home was facilitated by "a friend of a friend," according to Williams.

Mortgage documents identify him as Troy "Alim" Wallace, a Camden barber who knew Johnson through his shop and had set up a side business brokering similar "rescue loans" with no-money-down financing he secured through WMC Mortgages, one of the biggest subprime lenders nationally in the mid-2000s.

But Wallace also had a long history of financial malfeasance and a criminal record. He would eventually be named in several lawsuits relating to similar mortgage schemes. Williams said he didn't know any of this going in.

"I sat in a room with two guys some place in New Jersey . . . I'm assuming that was Troy. Should I have vetted him? Of course. But I didn't," Williams said.

Williams signed mortgage documents, the deed and a lease, under which Johnson would pay Williams $2,150 a month in rent to cover his mortgage costs, plus a $4,300 security deposit, maintenance costs, utilities and taxes.

Williams said he never saw the deposit, but acknowledged that he paid nothing for Johnson's house and left that room in New Jersey with a $22,500 "fee," paid out by Wallace's company, Innovative Mortgage, and a deed to the house.

Williams said he did not enter into the deal for profit.

"I only learned there was a fee after talking to Troy's company," Williams said. "If you're going to be in real estate, $22,000 is not an enticing amount of money."

That fee, along with money Wallace took for himself and his associates, was taken from the $225,000 loan - an inflated sum for a property that was assessed by the township at $116,000.

Williams said he never saw Wallace again. But he would soon be in regular contact with Johnson through phone conversations, inquiring as to why she had missed multiple rental payments.

Johnson sold her house to Williams with the idea of eventually buying it back, but like many similar financial arrangements, she quickly fell behind on the $2,150 a month rent.

She was living with her son, granddaughter and elderly mother at the time and had had a string of past financial problems. Williams said he only knew that she had been facing foreclosure.

Johnson's payments were spotty from the beginning, but soon ceased altogether.

"She called me, hysterical," Williams said. "Crying, saying she doesn't have the money. I was very nervous at that point. I didn't have the money to cover the two mortgages."

Within a year of the 2005 purchase, he said he began receiving late payment calls from the bank. He said he eventually began covering mortgage payments on her behalf, using money from the fee he had collected.

"It got eaten up quickly. I couldn't say how much money was lost. It was more than $22,000," said Williams.

Williams then asked lawyer Rodney Oglesby to attempt to collect the money he was owed. Oglesby was Williams' chief counsel in his Senate office at the time, although Williams stressed that the lawyer did the work "as a friend" and not on state time.

The pressure from Williams' lawyer accomplished little. In 2007, Williams said he asked another friend to check on the property because Johnson would not answer his phone calls. Williams said he is unable to identify that person other than to say that he lived in New Jersey. Johnson was at work at the time, but her 74-year-old mother called her, saying a stranger was on the property.

Johnson called 9-1-1.

Williams said he had only asked a friend to check if the property was still occupied, but a Winslow Township police officer who responded to the 9-1-1 call wrote in his report that he "met with a representative for Anthony [Williams] who advised that they wanted to change the locks to the residence while Darlene [Johnson] was not home."

The officer says he then advised the men that they would have to go through landlord-tenant court in Camden to change the locks.

In a separate statement filed in court, Johnson wrote that Williams "sent a locksmith from Philadelphia to illegally change my locks." She said she "spoke with the police on the phone and the policeman told me he repeatedly told them he was Senator Anthony Williams, and the policeman replied he had to go to court."

Williams said he was unable to explain the discrepancy, but did not remember speaking with the police.

"I talked to someone from the county," he said. "I do remember him saying something about the landlord-tenant thing, but not about changing the locks."

Williams said he never went to landlord-tenant court because he was worried about costs and how the nature of his arrangement would appear to a judge. Township records indicate that he had not taken out a rental license or certificate of occupancy for the property, as required by local ordinances.

"If she's a renter, why didn't I have a key? She never gave me access to the property. At a certain point in time I'm running out of money . . . and going to court costs money," Williams said. "I considered selling it, but I wasn't in a position to sell. She'd have to agree to move. So I thought, let the banks harass me for a little bit."

Ultimately, Williams walked away from the property. The house eventually entered the slow grind of foreclosure. A sheriff's sale was executed on Sept. 30, 2009, and the house went back into the hands of a bank.

Still, Darlene Johnson wouldn't leave. She filed two court-ordered stays of eviction in 2010 and 2011 in which she entered numerous documents related to her deal with Wallace and Williams into court record. She also entered a written statement, describing herself as the victim of "a mortgage scam," describing Williams as "verbally abusive." She states that she stopped paying because Williams attempted to change the terms of their lease in order to get more money.

Williams disputed all of these characterizations, saying Johnson failed to honor their contract that exploited his goodwill.

"I don't see Darlene Johnson as a victim," he said. "I see Darlene Johnson as no different than what's his name, Troy Wallace. I see her as a user. Forget using my good name. She used my good credit . . . I think she was pretty crafty, I think she knew the system. I was in over my head."

Eventually, Darlene Johnson was evicted by the courts, ending two decades living at 107 Baker Ave.

Bochetto, Williams' lawyer, said that in his opinion "a portrayal of Tony Williams as anything other than a victim would be unfair" and that the true criminal was Wallace, the officiant of the deal.

Wallace couldn't be located. In 2013, he served two months in jail for a probation violation relating to a 2006 forgery conviction, but the New Jersey Parole Board said it no longer knows his whereabouts after he was discharged from their supervision later that same year.

A former friend of Wallace's from Pennsauken, Crystal Taylor, said he had a heart attack a few years ago that resulted in memory loss. She said she hadn't seen him for a while.

"There are the type of people you want to keep in touch with and the type of people you don't want to keep in touch with," she said.

Williams said he didn't know much about Wallace, but the same year he purchased the Atco property, Williams partnered with four other men to buy a small building in West Philly. One of those men, Theodore McEachin, later purchased a property in Sicklerville, near Atco, that Troy Wallace would list as a residence in 2007 court filings.

McEachin could not be reached for comment.

Looking back, Williams said, he went into the deal with a good heart and came out feeling like he was taken. He blames Johnson and Wallace for the disaster.

"First I thought it was a puddle, then I thought it was a lake. Now I come to find, it's an ocean," he said. "I don't know if Darlene knew more than Troy. But she knew more than me. I've never been to Atco. I never got a key. I never got a 'Hey, thanks for helping me cover my costs.' "